Changes made to the John Lewis pension scheme have reduced the risk and mean pension scheme costs will be “less volatile”, the Partnership has said.

In its annual report, published today, John Lewis pension finance strategy manager Andrew Bennett said: “The work that we’ve done over the past year has really reduced the risk, and means that we’ll have a much more affordable pension scheme and the cost will be less volatile for us in the future.”

In January this year the Partnership announced that it had changed the annual rate of inflation for pensions accrued prior to 6 April 1997 from RPI to CPI, capped at 2.5 per cent. This has reduced the pension deficit by £270m.

Its triennial valuation of the scheme, as at 31 March 2016, found that since its last valuation in March 2013, its pension deficit has halved to £479m. John Lewis has paid £200m of the £303m deficit reduction cash contributions agreed with the trustee.

The market value of the assets of the scheme as at 31 March 2016 was £4,377.0m (31 March 2013: £3,169.0m). The actuarial valuation showed that these assets were sufficient to cover 90 per cent (31 March 2013: 79 per cent) of the benefits which had accrued to members. Its deficit on an IAS 19 accounting basis was £1,014m at 28 January 2017.

Other significant changes made to its pension arrangements in the past year include halving the rate of pension build up for its DB scheme, as well as extending the waiting period to five years before employees can join.

John Lewis operates the John Lewis Partnership Trust for Pensions, which includes a funded final salary DB section open to new members and a DC section. The Partnership has a 10 year plan to eliminate the deficit and it plans to contribute a total of £191.9m in 2017/18.

The next triennial valuation will take place 31 March 2019.

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